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SAP and IOT journey: ABC steel maintenance way

Executive summary

This case study is specifically about digital transformation of a prominent steel

plant’s maintenance department using data analytics / IOT based on SAP platform.

ABC steel is an integrated steel plant established in early 20 th century and since

then it has grown both organically and inorganically. Over the year they have

performed well. But in early 2000 world over best industries has seen the success

by using the better ERP platform like SAP etc. So, ABC steel plant also launched

SAP based transaction in 2002 with majorly two motives:

 Enhancing the availability of equipment

 Exploitation of equipment to increase the plant’s throughput

Objective of the study:

1. Why a digital platform is required for a maintenance department?

2. How to overcome the problem of this transformation.

3. Is any ERP system enough for 100% success?

4. Why IOT & AI introduced.

5. Problem faced by the plant and way forward.

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SAP and IOT journey: ABC steel maintenance way

On 20 June 2017, in one of the SAP review meetings of Maintenance department, the Chief of

Maintenance, who was the chairperson of the meeting, was happy with the department's progress

in implementing SAP. But at the same time, he was very unhappy with the strategy used by the

different sections. He always advises during his meetings that it should be implemented in such a

way that it should not increase our job. Otherwise, it will not be appreciated by the lower

management and employees, the results will not be sustainable, and the system will be

abandoned in the longer run.

ABC steel started the journey of maintenance through SAP in 2002. It took almost eight years to

achieve 90% utilization. But to take the meaningful output from the SAP it took almost next 7

years and also it raised the requirement of IOT and AI.

Background of Company

ABC Steel Jamshedpur plant was commissioned and started in early 20th century with 0.5 MT

capacity with the vision of one of the pioneer entrepreneur of India. In 100 years, ABC steel

expanded organically and inorganically. The capacity has increased from 0.5 MT to 10 MT, and

ABC steel acquires various plants in India and abroad.

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ABC Steel is an integrated steel plant with captive mines, iron beneficiation plants, steel

manufacturing, and mills for final products. The plant produces two types of product Long and

Flat products, and prominent customers are Maruti Suzuki, Toyota, etc. flow chart of the

complete process is in Exhibit 1.

Brief introduction of the Maintenance department of ABC steel

Shared Services (SS) division provides essential and diverse services to ABC Steel Jamshedpur

works. Its services primarily comprise maintaining plant and equipment health, providing

utilities and infrastructural support for smooth operation. It has a large workforce with diverse

skills and has its presence over the entire Jamshedpur Works.

The Mechanical and Electrical Maintenance Departments ensure high plant availability through

DM, CCPM and PS&TA. The Spares & Services department is responsible for overall spares

sourcing & manufacturing and also provides other infrastructural support. The Maintenance

Expert Group is responsible for high-level technical analysis. The Power System department is

responsible for power generation and distribution of utility gases while the Electrical

Transmission and Distribution department are responsible for power distribution across works.

The maintenance department gives its services to 36 operation departments for maintenance-

related activity, up-gradation projects, and complete set up of a new plant. Currently, the SAP

utilization for maintenance activity is 97%. But it's a long and tough journey since 2002 when

SAP was introduced.

The journey of SAP in the maintenance department

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SAP was introduced in 2002 for Maintenance department with two modules:

 Planned maintenance (PM): for the planning of maintenance activity

 Material management (MM): for spare and cost management

Primary reasons for implementing SAP MM module were:

1) Reducing transaction time.

2) Better and quick linkage of cost with different profit centers within the plant

3) Better review system of Plan v/s Actual budget

Implementation of SAP MM was a bit easy as the major part was implementation in the SAP

system only and less human intervention was required that is purely transactional. And the

response needed was also SOP based, i.e., the user has to follow the same set of steps for every

transaction. So, there were no significant issues faced by the department in the implementation of

this module.

Significant reasons for the implementation of the SAP PM module were:

1) System based Equipment maintenance history.

2) Equipment chronology data.

3) Uniformity and Horizontal deployment of best maintenance practices

4) Reducing MTTR and MTBF

5) Trending and predicting failures.

6) Increase in availability of equipment.

The increase in equipment availability throughout the chain by 1% means an increase of revenue

by Rs120 Crores (approx.)

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Although the journey of implementation of SAPPM was not easy as it required high human

intervention. Maintenance people must decide the frequency, Maintenance activities and quality

parameters, keeping in mind that equipment must fail within the desired frequency of

maintenance. Till 2010, SAP utilization for maintenance department was 90 %, which is an

excellent achievement. Management decided in same year that SAP utilization has to be

increased to 98%. But a major challenge has been started after 2010 when new 3 MT production

facilities have been added in ABC steel. But due to clear guidelines, learning from the older

facilities, the ramp-up and completion was fast and completed by 2013.

The problem faced during SAP implementation:

Various system and psychological barriers that affected the pace of implementation and the

quality that was initially thought of. The barriers that came up are:

1. Computer literacy issues among employees initially: lots of training has been conducted

over many years for different levels.

2. Technical knowledge gap among people and departments which hampered the thought of

uniformity: To overcome this problem, standard maintenance practices have been

prepared for different equipment from time to time by the central team. Department has

to adapt and implement it according to its system.

3. People’s resistance to change.

4. Increase in SAP maintenance plan also means an increase in shutdown time

Third point above was the department's most significant challenge, where people were not

appreciating the need for a new system and were happy with the printed checklist. As
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management has enforced the SAP MM, which was the biggest reason for success was not

possible for SAP PM as people's knowledge was required for the success of this module.

Due to rigorous reviews at different levels 90% SAP implementation has been achieved by 2013.

and, it was found that the availability of equipment has increased by 10 %. But after reaching

almost 90%, it is not improved even after improving SAP maintenance plan's quality or quantity.

The main reason was an increase in the maintenance plan, also increasing the downtime of

equipment. This was one of the reason why the management needed to introduce AI and IOT.

Introduction of AI and IOT

With the need felt by the management and also the launch of Industry 4.0 centrally by MD,

Maintenance departments also started working in the same direction with the following

objectives:

1) Improve ease of maintainability and productivity

2) Reduced spare inventory

3) Improve safety and ergonomics

4) Improve resource productivity

5) Improve process /plant throughput

6) Switching from planned maintenance to preventive maintenance by trending and

prediction.

Initially to take up the IOT journey forward few teams was formed to visit the best plants and

few benchmarks has been decided like Shell, Exxon Mobil etc.
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Pilot project has been taken for fuel optimization in one of the steel making shop where with the

investment of Rs 1 crore company saved Rs 100 crore and also full filling the above benefits.

After the success of pilot project new section has been formed under Vice president SS. That

section is primarily responsible for uniformity and standardization of sensors and monitoring the

projects taken up by different departments. Also, Automation and IT departments were merged

together for better collaboration as automation team always needs support from IT team for

creating the visualization platform.

Forecasting has been done after analyzing major proposed projects, there will be a value creation

of Rs.2000 crore on the investment of Rs.700-950 crores between year FY19-21.

Upon the approval of management various project has been taken for IOT and AI in the last three

years. Because of these projects, the condition of the equipment is now visible at a remote

location where people are placed to monitor the condition regularly. It also gives alarm to the

concerned people when abnormal conditions occur, or such conditions are predicted. Technical

part of one of the IOT scheme is attached in the Exhibit 3. Where sensorisation, use of internet

services, use of cloud and ultimately logical visualization of the data has been shown.

Problem and way forward

Adapting IOT and AI solutions have some problem which is yet to be taken care by the

management to fully utilize the IOT schemes that are already implemented or will be

implemented in the future:

1) No readymade solutions are available, solution available must be clearly understood by

the departments according to their requirement

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2) IOT require sensors which need to be wisely chosen so that it solves the purpose and

remains cost-effective.

3) More focus required on the AI part then IOT.

Exhibit 1: Flow chart of Complete process (from raw material to finish product)

Raw material Blast furnace for LD shops for steel

processing unit Iron beneficiation manufacturing

Shipping of final Mills for Finished

products product

Exhibit 2: Structure of shared services group

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